Panel demand to benefit TPK

By Helen Ku / Staff reporter

Mon, Apr 15, 2013 - Page 13

TPK Holding Co (宸鴻), one of Apple Inc’s main touch panel suppliers, is expected to benefit from strong demand for panels used in touch-enabled notebooks, despite concerns about slowing panel shipments for Apple’s iPad and iPad mini, JPMorgan Securities (Asia Pacific) Ltd said last week.

With the anticipated vigorous shipments of panels for touch-enabled notebooks, JPMorgan said it expected TPK’s margins and earnings would beat market expectations in the first half of the year, adding that the company may see a sudden increase in sales and profits in the second half of the year.

“We believe that TPK, as the world’s largest touch panel vendor, enjoys economies of scale, which is why we expect that there could be meaningful upturn in the company’s earnings,” JPMorgan analyst Narci Chang (張恆) said in a note on Monday last week.

Because TPK is also the largest buyer of key materials, such as damage-resistant gorilla glass and the thin films of indium tin oxide (ITO) used in Apple’s tablets, the company would enjoy first pick in acquiring key components despite ongoing shortages of materials, Chang said.

The brokerage firm raised its price target for TPK shares to NT$780 from its previous target of NT$720.

JPMorgan forecast TPK’s shares would continue to outperform the broader market throughout this year after it introduces its new tablet products using proprietary touch-on-lens technologies in the second half of the year.

Meanwhile, UBS Securities analyst Arthur Hsieh (謝宗文) forecast TPK would see its sales decline sequentially by 5.2 percent to NT$46.8 billion (US$1.56 billion) this quarter, due to a high base last quarter and lack of new capacity, though the estimate will represent an increase of 29.8 percent year-on-year.

Hsieh said in a note that TPK’s second-quarter net profit would grow 35.5 percent from NT$2.94 billion during the same period of last year. The Swiss-based brokerage house upgraded its target price for TPK’s shares to NT$712 from NT$682.